When bitcoin was created in 2009, it brought with it equal parts excitement and apprehension. Bitcoin is what is known as a “cryptocurrency,” an online form of currency based on blockchain technology that is borderless, secure, decentralized, and can be transferred/exchanged instantaneously. By many accounts, bitcoin has been a success. However, their incredible price fluctuations make cryptocurrencies unsuitable for most companies (i.e., their price is based on supply and demand, and a cup of coffee sold in bitcoin might just as likely decrease by 50% as increase by 50%).
Enter Chronobank, a blockchain project aimed at disrupting the HR/recruiting industries through the creation of a new hour-based cryptocurrency and a digital marketplace for exchanging labor. (Blockchain is a distributed ledger technology, cryptocurrencies are but one of its many applications.)
Chronobank is an Australia-based startup founded in 2016 by a group of blockchain technologists and staffing veterans. The company’s first project is creating a new currency for what it hopes will become a global exchange for labor services: labor hour tokens. Labor hour tokens are linked to the average hourly wages in a host country, and backed by actual labor forces from recruitment and labor-hire companies (one of the firm’s initial backers was the Edway group, a large Australian staffing company).
Essentially, an employer can purchase a labor hour token and then use it to purchase one hour of labor (Workers who earn labor hour tokens can convert them to cash via a debit card). Because the tokens are tied to wages in a country, they are immune from the wild price fluctuations of traditional cryptocurrencies and adjust to inflating wages (i.e., a token purchased today will buy you the same hour of labor two years from now, even if wages have risen). The firm claims this setup enables employers to get the benefits of a cryptocurrency (security, borderless and real-time transfer, etc.) without the risk that the price of the currency itself will go bonkers (as with other cryptocurrencies), while simultaneously protecting against inflationary risk inherent with fiat currencies.
The next phase is building a marketplace where labor hours can be bought and exchanged. Instead of charging a markup when an employer purchases labor hours, the firm will charge a nominal fee on the issuance of labor hour tokens.
While digital marketplaces for labor exchange are not a new concept (in fact, Chronobank even references Upwork and Uber on its website), adding a cryptocurrency to the mix opens up some interesting possibilities (more robust contracts, protection from currency fluctuations, real time peer-to-peer monetary transfers, a holistic transaction ledger/history, etc.).
The company has secured $9 million to build out its technology. Its labor hour tokens are planned to launch in November, and the digital marketplace in 2018.
Chronobank wants to give staffing firms, workers and employers their own currency, and might just transform how labor is procured in the process.